We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy

See Pricing

What's Your Topic?

Hire a Professional Writer Now

The input space is limited by 250 symbols

What's Your Deadline?

Choose 3 Hours or More.
Back
2/4 steps

How Many Pages?

Back
3/4 steps

Sign Up and See Pricing

"You must agree to out terms of services and privacy policy"
Back
Get Offer

The Furniture Fire Case

Hire a Professional Writer Now

The input space is limited by 250 symbols

Deadline:2 days left
"You must agree to out terms of services and privacy policy"
Write my paper

History

In 1992, an accidental fire destroyed a furniture warehouse in Tampa, FL. Upon these findings, the furniture company made a claim to their insurance company for demand of lost profits. In doing so, the furniture company submitted a profit calculation, or the GPF, of the burned inventory. Determining Factors Because there were no sales receipts and the prices were unknown, the furniture company used 253 random invoices pulled from the 3005 total invoices from 1991 to calculate the average GPF.

These invoices were then separated into 2 groups.

Don't use plagiarized sources. Get Your Custom Essay on
The Furniture Fire Case
Just from $13,9/Page
Get custom paper

One consisting of 134 samples and the other one had 119 samples. The GPF calculated for the 134 group was 50. 5%. The 119 group GPF was 51. 0%. The average GPF for the two was 50. 8%. Because the average GPF for this type of business is typically 48%, the insurance company contested this while the furniture company maintained that the samples were completely random. To put this in terms we can all understand, we must know that 1% is equal to $16,000.

In essence, the furniture company is claiming a loss of $812,800 while the insurance company thinks the maximum value of this case is 8,000.

The difference being $44,800 in favor of the furniture company. Because of this dispute, a lawsuit was filed. During the discovery phase of the lawsuit, when both side submit all of the information they have to each other, the insurance company hired an independent CPA firm to calculate the GPF. Although we did not get those results, we had enough information given to us to determine if the furniture company had committed some type of fraud.

Assignment Our assignment for this project is to determine if there was fraudulent activity on the part of the furniture company. To determine fraud, we had to find the probability that a standard normal random variable exceeded the GPF samples given to us. Mean for both random samples is 0. 00385 or 0. 3%. What does the 0. 3% mean to us? It means that the GPF numbers submitted to the insurance company had a 0. 3% chance of being accurate. In other words, we contend that the likelihood of fraud in part of the furniture company is evident.

Cite this The Furniture Fire Case

The Furniture Fire Case. (2018, Jul 20). Retrieved from https://graduateway.com/the-furniture-fire-case/

Show less
  • Use multiple resourses when assembling your essay
  • Get help form professional writers when not sure you can do it yourself
  • Use Plagiarism Checker to double check your essay
  • Do not copy and paste free to download essays
Get plagiarism free essay

Search for essay samples now

Haven't found the Essay You Want?

Get my paper now

For Only $13.90/page